In case shares are bought back out of free reserves, the company must transfer a sum equal to the nominal value of shares bought back to..............

Capital Redemption Reserve Account

The correct answer is option 1- Capital Redemption Reserve Account.

The company can buy back its own shares either from the free reserves, securities premium or from the proceeds of any shares or other specified securities. In case shares are bought back out of free reserves, the company must transfer a sum equal to the nominal value of shares bought back to ‘Capital Redemption Reserve Account’.